Is housing allowance subject to FICA?
The tax issue is that although you had no “taxable income” relative to either Federal or State income tax, the value of the Housing Allowance is subject to a tax which is the equivalent of Social Security [FICA] and Medicare Tax and is known as Self-Employment Tax [SECA].
Is housing allowance subject to Social Security tax?
The fair rental value of a parsonage or the housing allowance is excludable only for income tax purposes. The minister must include the amount of the fair rental value of a parsonage or the housing allowance for social security coverage purposes.
Do pastors pay FICA on housing allowance?
For these employees, the church pays the employer portion of FICA 7.65%. Therefore instead of paying FICA, they pay SECA [Self-Employment Contributions Act taxes]. Pastors/ministers are responsible for both the employer and employee portion of the tax – a total of 15.3% on salary + housing allowance.
Is housing allowance considered taxable income?
The housing allowance is an exclusion from income permitted by Section 107 of the Internal Revenue Code. It is not a deduction. In other words, a housing allowance is money that is not reported as income.
Is housing allowance reported on W-2?
Generally, the housing allowance is reported in box 14 of the W-2 and is not included in boxes 1, 3 or 5. The fair rental value of a parsonage or the housing allowance can be excluded from income only for income tax purposes.
Is parsonage income taxable?
Your parsonage allowance and cash housing allowance are not included in your gross income for federal income tax purposes. You get them income tax-free, at least federally.
Is parsonage allowance taxable?
A minister’s housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.
Is housing allowance included in Box 1 of W-2?
A housing allowance is a portion of clergy income that may be excluded from income for federal income tax purposes (W-2 “Box 1” wages) under Section 107 of the Internal Revenue Code.
How do I report a parsonage on my W-2?
If the minister received a parsonage allowance, it will generally be reported in Form W-2 Box 14. The amount listed there is considered the fair rental value of the parsonage and will also need to be entered on the tax-free income worksheet.
Is housing allowance taxable in Canada?
If you provide an employee, including the superintendent of an apartment block, with a house, apartment, or similar accommodation rent free or for less than the fair market value (FMV) of such accommodation, there is a taxable benefit for the employee. You have to estimate a reasonable amount for the housing benefit.
Is rent allowance taxable?
All allowances paid or payable for accommodation that is not of a temporary nature are fully taxable.
How do you report housing allowance on w2?